scholarly journals How Powerful is Unannounced, Sterilized Foreign Exchange Intervention?

2020 ◽  
Author(s):  
Alain Naef ◽  
Jacob Weber
Keyword(s):  
Foreign Exchange ◽  
Foreign Exchange Intervention ◽  
Sterilized Foreign Exchange Intervention

scholarly journals How Powerful Is Unannounced, Sterilized Foreign Exchange Intervention?

2021 ◽  
Author(s):  
Alain Naef ◽  
Jacob Weber
Keyword(s):  
Exchange Rate ◽  
Money Supply ◽  
Foreign Exchange ◽  
Foreign Exchange Market ◽  
Central Banks ◽  
Exchange Market ◽  
Foreign Exchange Intervention ◽  
Bretton Woods ◽  
Bank Of England ◽  
Sterilized Foreign Exchange Intervention

Though most central banks actively intervene on the foreign exchange market, the literature offers mixed evidence on their effectiveness: particularly for unannounced interventions. We use new, declassified data from the archives of the Bank of England and the institutional features of the Bretton Woods era to estimate the effects of intervention on the exchange rate. We find that a purchase of pounds equivalent to 1% of the money supply causes a statistically significant, 4-5 basis point appreciation in the pound.

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